Help the Victims of Consolidation

This has been a horrific holiday season for radio people in terms of pink slips, wrecked careers, disappointed hopes and even unemployment while fighting illnesses.

I will not forget the fine people who are the backbone of the radio industry even if the consolidators can dismiss them so easily.

When I attended Temple University in Philadelphia, one of my wonderful professors -- Lew Klein -- the American Bandstand and Philadelphia television executive told my freshman class that if you haven't been fired five times in your career, you're not in broadcasting.

What an eye-opener for a young man getting ready to learn his trade. That was back then before consolidation was a gleam in the eye of the Mays family and the handful of consolidators who rule our industry today. Yes, even then, security in radio was at a premium.

We still got fired from time to time. It was just easier to get a job across the street when two companies didn't own all the stations.

Those of you who read me every day may remember my tale of Andy Luminella, the young man who worked for me when I was program director of a Philly radio station. Andy had cancer. He underwent treatments and then returned to work when he could. He was a newlywed with his life and career before him. But when he died, the parent company, General Cinema, was not able or willing to pay any death benefits to his young widow who didn't even have the money to bury her new husband.

I wish I could say this is the only story of its kind that I can share with you. I know better and many of you do, too. You have shared your stories with me over the years and I have printed them -- in the face of consolidators seemingly without conscience.

For those of you who have inquired about what we can do to help our brethren, there is a way -- a damn good one at that.

The Broadcasters Foundation of America helps radio and television broadcasters in need -- those active or retired broadcasters stricken with illnesses, widows struggling to raise families and broadcasters upended by losing their jobs at a critical time in their families lives.

Last year the Foundation distributed close to $325,000 in monthly grants to colleagues in 36 different states whose plight was confidentially brought to their attention by concerned broadcasters. All were in acute financial need, often due to tragic and unforeseen circumstances.

You might be surprised to see the list of contributors to this outstanding program. Yes, there are some consolidators on the list. Perhaps it assuages whatever guilt they might have, but the list is even more impressive by how many everyday broadcasters from radio and TV give as little as $50 to support this very worthy group.

Ward Quaal, Ed McLaughlin and Phil Lombardo have helped the Broadcasters Foundation of America become a world class charity and Gordon Hastings runs it lean and mean.

Radio people are a family. It matters not whether we have fiercely competed with each other or whether we don't even know the person in need. We are one and not even consolidation has been able to put that sentiment asunder.

Nothing can change that. Not consolidation. Not cold hearts. Not bad business practices.
It's what distinguishes the radio business from other careers.

Today, if you are able and willing, consider helping this fine group that lends a helping hand to the least of us and the rest of us.

Should you like to learn more, email me and I'll put you in touch with people who can put your donation to work right away.

With 2008 likely to be a year of career carnage unlike any we have seen to date, this is a good way to do something positive for yourself if you are fortunate enough to remain fully employed and for others who get caught in the tragedy of what has clearly become the radio industry's greatest failure -- consolidation.

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CEASED SERVICES AND TECHNOLOGICAL WARINESS

The introduction and suspension of media services is becoming a regular occurrence and the combined effects of multiple false starts is creating turmoil in the marketplace and making consumers wary of new services.

Let me give some examples. Wal-Mart recently announced it is halting its online video download service after only a year of operation because Hewlett Packard Co. has discontinued its underlying technology due to poor market performance. The New York Times has one of the most successful newspaper websites but has changed its business model several times, most recently abandoning Times Select consumer paid model for an advertising-based model. Sony created a CONNECT Player for its Walkman, PSP, Clie and VAIO that was so plagued by problems that it ended support for the product and advised owners to use another music player and library manager instead. These are only a few of the hundreds of starts and stops of services that have occurred in recent years.

The primary reasons for failures of these types of services have been the rush to get them to market and the unwillingness of companies to financially support services for more than a limited time. These factors lead to insufficient product development efforts before introduction and rapid abandonment of products and services that may need time to be corrected or to mature in the market.

Companies of all kinds introduce and withdraw products for the market on a regular basis, but rapid introduction and withdrawal of media services tends to create more disruption for the consumer. Media services differ from other products that companies decide they will no longer manufacture because ceasing media services reduces functionality of hardware products for which the services were designed. Suspension of services also interferes with the strong habitual uses of media products and services that results from them being experience and lifestyle good and services

Media and communication technologies are changing rapidly but consumer behavior changes much more slowly. Consumers need time to learn about and get used to new technologies. The appearance of consumer technology fatigue from the constant changing and versioning of media and communication technologies is well recognized. Today, the rapid introduction and cessation of services is fueling technology wariness among consumers who have purchased hardware on the assumption that the services sold with it will continued to be offered throughout the useful life of the product.

It is a problem that media and communication companies have created themselves and it is making media markets more turbulent and complex.

MONETIZATION CHALLENGES IN DIGITAL VIDEO MEDIA

The real challenges facing media companies today are not technology or opportunities, but how to monetize activities in digital video media. The popularity of video downloads and streaming video on internet and mobile devices is growing exponentially and motion picture and television production companies are rushing to create deals to participate in the phenomenon.

The biggest challenge is finding workable business models. A combination of technology and capricious consumers are altering existing media business models and making success with new models difficult. The traditional business models of media are eroding as audiences and advertisers respond to changing media markets and today both legacy and new media are struggling to find effective new business models for their existing operations and new products and services.

It is complicated because a fundamental shift in financing media is underway and many companies are finding it difficult to adjust their business perspective. During the period of industrial society consumers made relatively few direct payments for media and business models worldwide were based primarily on advertising expenditures, license fees, and tax payments. In post-industrial society, the rise of new social and economic arrangements and the proliferation of types of media and media content, business models are shifting toward a consumer model. Today, for every dollar spent in the U.S. on media by advertisers, consumers now spend 7 dollars. Media have shifted from a supply driven market to a demand driven market.

This means that companies must spend a good deal of effort ensuring they are creating value for customers. However, it is not enough to create value for customers. At the end of the day, economic value must be created for the company or it is not running a business.

Although media firms are rapidly entering digital video provision, there are significant business problems with contemporary deals involving new forms of digital video media. Companies are not buying return on investment, but are buying market share in hopes that income will follow. The trend is especially evident in social media, where companies are pinning their hopes on Internet advertising growth and increased abilities to better target advertising. It is a big gamble because social media users have been ad averse and click through rates are less than one-tenth of those on other internet sites.

You Tube was purchased by Google for $1.65 billion but has advertising revenues of about $250 million and My Space, which was acquired by News Corp. for $580 million, receives about $450 million in advertising revenue. On the face of those numbers these do not appear to be rationale business investments, but what the firms are actually doing is buying large audiences in hopes of positioning themselves as leaders in online advertising.

They are doing so because Internet advertising expenditures are heavily concentrated and the top 10 sites in the U.S. account for 70 percent of the total advertising expenditures. The high prices for social media are part of a fight for the top because of the ad revenue concentration. The companies are taking a business risk that may or may not pay off depending on the willingness of the users of those social media to accept advertising and monitoring of their activities.

Across digital video media we are now seeing a variety of company strategies. Some firms are pursuing ad-supported free media business models, whereas other firms are taking the road toward conditional access as part of subscriptions to Internet and mobile services. Still others are mixing income streams from both conditional access and advertising. The industry is not yet mature enough and consumer preferences are not yet clear enough to determine which will be the most successful revenue model. As a result, firms need to be agile, flexible, and able to change rapidly in their approach to digital video media.

An Automobile Is An HD Radio Without Four Wheels

Detroit Radio Advertising Group (DRAG) legendary President and COO Bill Burton coined the catchy phrase "An automobile is a radio with four wheels".

True enough to radio people, but if that phrase is accurate then "An Automobile Is An HD Radio Without Four Wheels". In fact, the wheels are coming off.

I say this because something is very suspicious in Detroit. The proponents of HD Radio have relied on support from automakers and marketing muscle from big box retail stores like Best Buy to sell, well -- hardly any HD radios.

Imagine that.

If Best Buy, RadioShack and Wal-Mart can't evens sell HD radios then maybe consumers don't want them. Is that okay to say or is it unpatriotic?

It won't be long before Detroit automakers that have bigger fish to fry to save their own businesses will put HD radio where it belongs -- on the scrap heap.

Many consumers who own HD radio can't even get an HD signal in major markets.

One reader tells me he has three useless HD radios. If you don't believe him, go into Best Buy and ask one of those bright-eyed sales associates to sell you an HD radio and be ready for the "say, what" expression you'll get in return.

Another reader said when he tried to buy an HD radio, a clean cut young sales associate walked him over to the satellite radios. When you have to depend on 18-24 year olds to sell you a radio, you know you're in trouble nowadays.

Okay, look to the best and the brightest -- the consolidators of American radio.

Quick.

Where's the compelling content that makes it worth owning an HD radio? Why aren't they spending any money on programming to no one? Most of today's consolidators never met a deal they didn't like but still they let HD wither on the vine.

HD radio is a bust.

And, terrestrial radio will be a bust soon enough if the industry looks to HD technology for answers that are on the Internet and in the mobile space.

Your friends from iBiquity wrote a letter to the FCC recently regarding the XM - Sirius satellite merger and while they didn't take a position on the merger, urged the Commissioners to consider mandating satellite radios with HD capability built into them. That's a real winner. We already have that -- it's called an HD radio and apparently nobody wants to buy them. Since nobody else wants it, why not force satellite radio owners to get HD.

The fact that we still belabor this technology as a potential answer to radio's current decline is an expression of how desperate the radio industry has become.

There are so many smart people in radio. You know it and I know it.

How can so many smart people be so -- well, can I just say it -- dumb.

So, let's review:

1. A satellite radio is a radio I am willing to buy and pay $12.95 for every month to escape from terrestrial radio. Don't put HD on my satellite radio or I will bolt for the Internet right now -- even without universal mobile coverage.

2. A terrestrial radio is a radio that comes free with my car. I haven't bought a portable radio for my home in years. The one I own still works but I don't use it. A terrestrial radio is like going to a hospitality suite at the NAB Convention. I can eat all the Swedish meatballs I want for nothing but I have to be accosted by someone trying to get me to buy something.

3. An Internet radio is a radio that has unprecedented variety and is the consumers answer to mundane programming but because there is limited WiFi and no WiMax coverage. It's like listening to a radio with dead batteries. But once I can hear it on the go, it's free and it's diverse. It is the future.

4. HD radio then is an Edsel (remember back in 1958 Ford Motor Company's big flop that looked like a Ford sucking a lemon?).

2008 is going to be tough enough.

Does the radio industry really want to embrace this HD Edsel for another year when there are so many more promising things to do?

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The Labels' No Tax Left Behind Act

Did you see a lot of CDs under the tree this year?

Guess not.

CD sales are off and when the final figures are in that include the fourth quarter of 2007, it's not going to be pretty.

If you follow the logic record labels are applying in seeking to lift the royalty tax exemption from radio, now is a good time to fight for a separate tax on the record industry for failing to support the radio stations that have generated most of their sales profits in modern times. In other words hit them when they are down -- as they are trying to do to the radio industry.

It could be radio's answer to the record labels' No Tax Left Behind Act

While we let pros -- I mean lawyers -- fight it out, let's see what else the record labels are trying to do to kill off what's left of their business:

1. They've recently enlisted the support of the American Federation of Television and Radio Artists (AFL-CIO) to support the wrongheaded Public Performance Rights Act. You may remember that Congressmen Howard Berman and Darrell Issa (both from California) are pandering to their real constituents -- the music business -- by seeking additional taxes on radio airplay. Here's AFTRA's one-sided pitch -- the one that leaves out how much money radio airplay has made for record labels:

"It is hard to believe that for decades now, a commercial business has built itself into a multi-billion dollar industry by using AFTRA members' works without paying for them. But that is exactly what has been happening. Radio broadcasters in this country have attracted their audience -- and, in turn, paying advertisers -- through the lure of our music without paying one cent to the artists and musicians who created it. While songwriters are justly compensated when their compositions are played over the air, the law denies the same right to those who bring the songs to life. It is time to finally do away with this inequity".

Not one mention of what a crummy business the record labels would have had if they had to find other ways to promote their music. Hell, the major labels can't even use the free Internet to sell products or services. What will they do without terrestrial radio?

There's 127 lawmakers on record against the legislation and even the NAB knows which side of this issue to be on yet I think we could see a performance tax levied on radio in the near future and that would be disastrous -- for the music industry, too.

And by the way, a performance tax on the par with what the CRB levied on satellite and Internet is unacceptable. Satellite and Internet should be on a par with terrestrial radio -- we play, you ring the cash register and get to keep the proceeds.

2. The slumping record industry has spent the year expanding their RIAA-driven jihad to punish a handful of young people for what has now become commonplace and accepted among most 18-24 year olds -- stealing music. Sorry you don't like it but the reality is as long as there is an Internet the labels can no longer insure that their product is safe from piracy. Right or wrong -- suing a handful of people hasn't worked, isn't working and will never work. The labels apparently have no other strategy.

3. Labels have introduced the before Christmas layoffs and firings that their radio industry brethren have become so skilled at doing. Of course this may cut expenses but as with radio, it doesn't do one thing for getting business back on track. Impressive with Wall Street but a flop at the malls where what record stores still operate are left to sell CDs to those who will buy them. Now that's what I call music!

4. Still no mobile strategy.

5. Still no new hit music genre to drive sales, thefts -- anything.

A friend of mine emailed me over the holiday to say he had dinner with lots of young people at his extended family gathering and he was reporting that there was more interest in radio (as a source for discovering new music) than one might expect. But get young people on the topic of record labels and they hate them.

Maybe that's a new strategy -- get them to hate us and we'll make good customers out of them. If so, someone tell Target they need to get on board with this brilliant record label strategy.

I read recently in Inside Radio that an unnamed Texas air personality's idea for dealing with the labels' attempt to abolish radio's royalty exemption is "Let's stop announcing artists and song titles". Well, hell, we did that a long time ago.

Radio industry leaders don't have the spine or the wisdom to do so, but the answer to any performance tax -- should it pass -- is to announce that radio stations will play only music that is rights free. Period. Done. No exceptions. Stand tall. We shall overcome. Solidarity.

I know. I know. You say this would kill radio.

No, what's killing radio is playing the same old songs over and over again. The audience is rebelling -- young people have turned to the wide expanse of the Internet for more variety. Now you're going to get the honor of paying for the needless repetition of what the labels call new music. This is your chance to get out from under a losing strategy.

So, get some guts.

Publicly vow that even if one-half of one percent of a tax is passed, your stations will open its airwaves to all those talented artists out there who represent diversity and are willing to forgo their royalties in order to get airplay.

You'll be helping the young artists of tomorrow.

You'll be giving your listeners the variety that is not currently available on terrestrial radio.

And you'll bring the record labels to their knees in 30 days or less. The labels know they can't exist without radio airplay. They just know the radio industry will accept the royalty tax they're pushing through.

Put teeth into your opposition to a radio royalty tax and you'll be taking a giant first step in helping the labels develop a new business -- waste management -- destroying all the remaining CDs that will not sell without radio airplay.

I dare you.

Step up or shut up when they eventually make you pay for ringing their cash registers.

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The Quiet Before "The Noise You Can't Ignore"

As everything in the radio business ground to a halt for the Christmas holiday I kept getting the feeling something big is up with Sam Zell and Randy Michaels.

That we're seeing only a small part of the master plan.

That the big bang is yet to come.

Consider that over the weekend and in uncharacteristic stealth fashion Sam Zell quietly announced a $1.1 billion deal to purchase eight very attractive TV properties from none other than -- Rupert Murdoch.

Murdoch is no fool. And Zell is the Murdoch of the radio industry as far as I'm concerned. The price is -- well, low -- leading one to speculate that there may be additional benefits to the seller.

What does Murdoch need?

Money?

No.

Would Murdoch like to stick it to Sumner Redstone?

What do you think?

Redstone is to Murdoch what the Mays family is to Randy Michaels. Murdoch and Randy are the same guy. Both like deals with an added whack to their enemies. In Murdoch's case, Redstone's UPN partner, Herb Siegel, retaliated by selling the UPN stations he contributed to UPN that were still owned by Murdoch. These included some big affiliates.

Get this part.

One day Redstone woke up and found his arch enemy Murdoch in control of his big affiliates like Channel 9 in New York. Stay with me -- the radio part is coming -- Redstone then whacked Murdoch by merging UPN and WB into the new CW Network and replacing any Murdoch owned UPN affils with the incumbent WB property forcing Murdoch to form the MY Network for those -- which has since been a disaster.

Problem for Redstone.

WB was a partnership between Warner and Tribune which Zell just bought. For example: The CW affiliate in New York is Tribune's WPIX-TV Channel 11.

If the Murdoch/Fox sale to Zell includes considerable cooperation with Tribune stations (some 40 or so at this point) and they move some or all to Murdoch's troubled MY Network, Redstone overnight loses key affiliates in important markets (Tribune has some big, major market affiliates) and UPN is where CBS was when Murdoch bought all those affils they had and converted them to Fox.

What payback!

History repeats itself and Redstone sees CW gutted in the process. Who knows -- maybe that old radio programmer Randy Michaels helps program Murdoch's MY Network and Fox has lusted after radio for years reportedly coming close to buying Salem at one point.

Guess I'm saying the Murdoch-Zell deal may have something as unpleasant as a barium enema built into it for Redstone. But also for the Mays family.

How so?

I speculated recently that the Lee and Bain $20 billion buyout of Clear Channel might not happen. It's been postponed until mid next year. That most investment banks like to close the books by year's end -- until they close they don't make one penny of their considerable commissions -- that I don't buy that the FCC is the problem in a deal this size -- and on and on.

But something even bigger might happen.

I would not be surprised to hear that Zell and Lee and Bain are negotiating so that if Lee and Bain eventually close on Clear Channel they flip it to Zell. That way Lee and Bain won't have to pay the more than half billion breakup fee and almost as important -- they won't look stupid.

The Clear Channel purchase is stupid!

Don't believe me? Look at the market. It doesn't like it either as CCU trades in the $35 range and lower and well below the buyout price of $39 per share.

My scenario.

Bain and Lee get out of the way. Get their commissions. Save face. Flip it to Zell but first Zell has to deal with whatever angry shareholders control the company. Current shareholders, plus Bain and Lee cut a deal with Zell. Zell probably doesn't pay the $20 billion price which is not likely attainable anyway. And what do we learn in Zell 101? Sam Zell buys undervalued properties. Could there be any more undervalued properties than Clear Channel?

The Mays' are toast.

Zell and Michaels get the same revenge that Murdoch could get by whacking Redstone. For us it may be all about programming, sales, marketing, the audience. For these guys money is secondary. It's about getting even.

Maybe my imagination is running wild again, but as many of you know over the years I've had a knack for seeing these things when they were uncomfortably ahead of fruition. My disclaimer: I could be wrong.

Give me this, at least.

The Clear Channel deal is busted.

Everybody in the Lee and Bain purchase is in trouble.

Lee and Bain like to keep postponing their pay day because it will look good for future deals -- kidding, kidding.

Randy Michaels spent the last five years sitting by the side of the Dali Lama letting go his understandable animosity towards the Mays family for cutting him down at the height of power.

Frank Wood, Randy Michaels and Bobby Lawrence are really not radio guys. Zell hired them, waved a magic wand and turned them into new age TV execs.

And there is a Santa Claus after all -- and he's a jolly old elf on a Harley and his name is Sam Zell.

It's the perfect storm.

Zell and Murdoch. Murdoch and Redstone. Zell rescues Lee and Bain. Randy gets even with the Mays' and all the barons in this greedy, dog-eat-dog business live happily ever after.

My bet is on Zell and Michaels in control of all or most of Clear Channel sooner rather than later -- the big story of 2008 -- and it may be getting ready to unfold right before your eyes.

When the "noise you can't ignore" is this quiet -- be afraid. Be very afraid.

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If the Clear Channel Deal Doesn't Close...

I'm wondering.

What kind of investment bankers fail to close on their acquisitions by year's end if they really want to buy? After all, they don't get their considerable fees unless they close.

Lee and Bain have been postponing their closing of Clear Channel ostensibly because the FCC hasn't approved the deal. Some skeptics might say that the FCC could have been accelerated for a deal this size. There certainly haven't been any major objections to Clear Channel going private.

So what's up?

I'm thinking that Lee and Bain may be noodling over whether they want to pay the half billion or so in penalty fees for walking -- and I think they've made up their minds. Now, let me caution you, I have absolutely no inside information on this -- only time will tell whether I'm seeing it clearly. I could be dead wrong.

Here's my personal opinion:

1. Lee and Bain walk and pay the hefty penalty fee for not closing thinking that it is cheaper to do that than to own Clear Channel and all the burdens that go with it during this moment in time.

2. Lots of lawsuits are filed by angry shareholders. They'll move to throw out the current management and that includes the Mays family. Clear Channel stock is by and large owned by arbitrage firms who bought it cheap and hope to profit from the sale price spread.

3. Enter Sam Zell.

4. I think (only speculation not based on information I have) that Zell already knows Lee and Bain won't close on Clear Channel. And who is Sam Zell? Zell is all about undervalued assets. He bought Jacor once and sold it to Clear Channel. He knows how to do this. I don't think a big player like Zell wants to own Citadel or Cumulus or string together other available properties now on the market. No, I think he's going to make a play for the big one -- Clear Channel -- and do it all over again.

5. Enter Randy Michaels.

6. Michaels in my opinion is all about getting even. He's like many of us -- a radio programmer. Some could say Clear Channel did Michaels dirt by taking away his power in 2002 and relegating him to some meaningless Internet job. Michaels has the same kind of ego and pride we all have in radio. I don't think it went down well and I think he's had a lot of time to think about what happened to him. After all, there is only one person who really knows the value of Clear Channel and that is Randy Michaels -- he put the clusters together. I'm thinking anything less than Zell and Michaels coming away with the big enchilada would be like a failure for them.

7. The timing is right. If Lee and Bain don't go through with the Clear Channel sale and the Mays' are in fact thrown out with angry shareholders threatening suits, in comes Zell to make them whole again -- without having to pay anywhere near what Lee and Bain offered. Didn't I mention the timing was right and Zell is a one trick pony when it comes to buying undervalued properties? It all comes back to Clear Channel. Events have come together in the U.S. financial system that make it hard to do deals, but Zell could get it done.

Okay. Okay. I'm wrong. It's just my imagination running wild.

Randy really did hire longtime associate Bobby Lawrence to help him run television stations.

And hired his old radio buddy Frank Wood Thursday just to run a small radio group with some TV stations attached. Maybe they'd just like to head into retirement running a lesser group than Clear Channel.

Maybe Randy is not "the noise you can't ignore" as he always said Jacor and Clear Channel was.

I know what I'm thinking.

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Randy's Revenge

The news broke yesterday that entrepreneur Sam Zell -- the founder of the Jacor radio group -- is bringing Randy Michaels back to work for him again when he takes over control of the newspaper and TV Tribune Company.

I predicted this months ago and I added that Randy will likely be involved in radio again -- a prediction I am sticking to.

Randy and I are like hockey players. As a dear friend of mine in the radio industry pointed out to me -- in some ways we're alike. Let's look at it in ice hockey terms. I'm a Flyer. He's now a Blackhawk. We've fought each other over the years but just as they do after each round of the NHL playoffs, we can shake hands.

Randy Michaels is just what the broadcast industry needs right now.

The sooner he gets back to running radio stations -- the better off the industry will be. He's tremendously competent. The Mays could never have put their current cluster platform together without him. He's a combination engineer, geek, programming gorilla and soothsayer. When Michaels was forced out of Clear Channel as the decision-making top exec, Clear Channel started its long farewell. I'm just sayin'.

There is nothing about Sam Zell that says he likes to run small companies. No, he and Michaels have big plans in my view.

What a great time to make a return.

The radio industry is adrift.

One group after the other succumbing to cost-cutting in the hopes of pleasing their investors but instead they have only disappointed their listeners and advertisers. And, they've lost the next generation. Even they know that now.

I think Sam Zell isn't just going to build a TV group and God knows the newspaper business is in worse shape than radio. I think they're getting back into radio.

They can cherry pick the good stuff. There's lots of stations on the markets and the even better ones may become available as the financial noose tightens around the necks of consolidators.

Sam Zell, if he is anything, is predictable.

Zell buys undervalued properties. Can you say radio stations?

If I'm reading them right Zell is ramping up and Randy is his man. He always was.

It's ripe for the taking.

How ironic. Clear Channel would not be in the mess they are in had they kept Michaels at the helm. Clear Channel is no longer a radio group. It's an investment package. The cutbacks are blinding because Lee and Bain are investment specialists. They are looking to cut costs, improve margins and if they're typical of Wall Street -- sell again at a profit.

This doesn't mean Zell won't do the same thing, but it will be a nice ride for those two baby boomers until they're ready to get out.

Now if Zell and Michaels assemble a new platform they will kick the asses of operators looking to take shortcuts. You know, the ones firing sales people right now at a time when they are needed the most.

I know as well as anyone that sometimes you have to wait to be appreciated.

As a former program director let me say this: if I knew Randy Michaels might be coming to a station near mine, I sure wouldn't wait to step it up. It will be too late.

Ladies and gentlemen, start your engines.

Randy and Sam are coming back in what may turn out to be sweet revenge.

Yet it is just what this sleepy, lost radio industry needs.

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FCC Unscrewing the Pooch

The phrase screw the pooch appeared in Tom Wolfe's book The Right Stuff meaning to mess up, commit a grievous error. It's a euphemism from US military slang that uses much stronger language involving a dog.

How apt, then, to apply this phrase -- which also appears in the Urban Dictionary -- to the current FCC which has begun the process of undoing some of the damage caused by consolidation.

Greedy radio consolidators have been asking for trouble -- almost from the start of consolidation which was enabled by the Telecommunications Act of 1996 -- and lobbied by your favorite trade organization -- the NAB.

I have no sympathy for what is about to happen because consolidators -- to borrow Wolfe's phrase -- have screwed the pooch long enough. Messed up terrestrial radio so that it would be attractive to Wall Street at the expense of its listeners on Main Street.

Only one problem.

Main Street is where Congress lives.

Their constituents have been complaining about consolidation and are fighting for local radio. Remember the disaster in Minot, ND? You'll recall no one at the local Clear Channel stations was home to help the local market through it a number of years ago? The radio listening public apparently has not forgotten and today the pressure is even being felt at Kevin Martin's FCC.

Martin won approval yesterday to allow cross-ownership in the top 20 markets -- and what I think will also become de facto cross-ownership in the smaller markets as well. Frankly, I don't care about media cross ownership. Let newspapers own TV stations and TV stations own radio. They're all dying anyway. No clue as to what to do because they can't get a handle on where the next generation lives. Onto the future.

The FCC has voted to start a rulemaking that could bring major changes to the radio industry. Almost all the owners -- not just consolidators -- are fighting it already. When the NAB and 34 state associations plus several dozen radio groups oppose re-regulation, then you can rest assured that re-regulation is exactly what the radio industry needs.

Under the rulemaking, stations could be required to establish permanent community advisory boards to discuss programming.

Now that's something to be afraid of, right? Who would fight this? Owners -- the same ones that have screwed the pooch for the past 12 years.

Stations might have to be staffed around the clock if the rulemaking eventually takes effect.

Who in their right mind would fight live air talent if in the same breath they sell terrestrial radio as a local medium? Only owners -- the ones who have driven listeners and advertisers away with voice tracking, unremarkable national syndication and bare bones programming.

The FCC is also considering allowing AMs to get FM translators. Who in their right mind could... well, you know who.

Radio owners have been asking for this type of intervention for years now.

They're like Britney Spears -- unhinged and unable to get their acts together. The FCC is radio's version of Promises, the Malibu rehab center to the stars. Now the FCC is threatening to drag the owners in screaming.

You can't be against re-regulation and for radio's survival at the same time. They go together.

Consolidators and the lemmings who follow their lead can't seem to take the cure so it's time for our FCC to force them to take their bitter medicine.

I think there's even more re-regulation on the way after the next presidential election especially if a Democrat wins.

Lots of tears have been shed by radio people whose careers have been ruined and/or ended due to cutbacks of late. I saw a recent list of Clear Channel cutbacks alone and it's staggering. And that's not including the other copycats who can't seem to succeed at radio even when they have a virtual monopoly.

Now it's all over but the crying for the biggest cry babies of all -- the consolidated and non-consolidated owners of America's free airwaves.

My good friend Joe Benson sent me news yesterday that underscores why the FCC should re-regulate now as witnessed by this move to make California's Antelope Valley the same as Los Angeles to Clear Channel's convoluted way of reasoning:

"It may be just coincidental, but perceptually there's a grim irony to the fact that right before FCC voted to allow certain media cross-ownership, a local station has been completely usurped. There seems to be a big format restructure and a sizable reduction in the work force at the CLEAR CHANNEL/LANCASTER/ANTELOPE VALLEY, CA cluster. Late last night, sources told ALL ACCESS that the local on-air staff of Modern AC KOSS (THE OASIS)/LANCASTER was let go, as the station is now simulcasting KIIS/LOS ANGELES. (This is not the first time this has happened; sister KVVS/LANCASTER is also re-broadcasting KIIS FM.) A check of the station's website found it now dubbed "105.5 KIIS FM."

Rumors abound that Country KTPI/LANCASTER will rebroadcast Modern AC KYSR (STAR 98.7)/LOS ANGELES) sometime after CHRISTMAS".

So much for localism without the FCC's intervention -- I mean, re-regulation.

There you have it.

A preview of 2008.

Stocks in the toilet. Citadel closed under $2 a share yesterday -- less than a bottle of Two Buck Chuck at Trader Joe's. But even Two Buck Chuck can sell for $4 in some states -- that's more than a share of Citadel these days. And how dumb is Disney looking to take stock in Citadel as a way of cashing out of a "non-core" business like radio?

The FCC is hell-bent to unscrew the pooch with rules that will force broadcasters to be more like what legendary owner Bill O'Shaughnessy calls fiduciaries of the public airwaves.

One might enjoy the arrogant radio owners' comeuppance a lot more if it weren't at the expense of so many talented general managers, programmers, sales managers and air talent who never for one moment forgot their roots.

Live and local.

The same can't be said for their owners.

I suspect that even this last minute intervention by the FCC is too late, knowing what I do about how the next generation has moved on to the Internet and mobiles spaces, but maybe -- just maybe -- we can remind them how radio got to be such a desirable acquisition in the first place before these Einsteins decided to play their failed game of monopoly.

To radio owners, I say forget Harvard Business School -- crack open a Monopoly board and learn all you need to know about radio:

Do not pass GO.

Do not collect $20 billion.

You win the game of Monopoly by building assets one stop at a time on the board (the market) -- not by selling off houses and hotels (stations).

You collect rents (advertising revenue) that generate fees (free cash flow).

You block competitors (TV, print, online, iPods) by owning local property inhabited by local real estate (live air talent) not by trying to change the rules when you're not winning.

Now, these same owners are stuck with a role of the dice and it's coming up snake eyes.

There's no "Get Out of Jail Free" card in radio.

Just the FCC to the rescue.

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The iPod Is Vulnerable

The young people I have been working with and studying the past four years voluntarily remind me that they have iPod fatigue.

I have written about this before but I keep hearing it -- and the term iPod fatigue is theirs not mine.

There is no doubt in my mind that you'd have to amputate their arms to pry an iPod away from this generation, but I've been thinking about iPod fatigue a lot lately. It seems to me that what these young people are saying is -- entertain me where I live.

They are not particularly addressing the terrestrial radio industry. Outside of NPR and some catch-as-catch-can listening this generation isn't looking to radio for help.

But they are plainly tired of hearing the same songs over and over again. It's like they all turned into Steve Rivers (just kidding, Steve!). You know, many of their iPods have a limited play list smaller than Steve. The fact is iPods aren't loaded with lots of music like radio station computers.

Another factor may be that as the years go on Gen Y is spending more time with their cell phones and smart devices. It's not unusual to see college students carrying around Blackberry Pearls. Of course, not every young person is blessed with a chance to go to college and many other young people can't afford an iPod.

But, almost everyone has a cell phone whether they can afford it or not.

I strongly believe that the mobile device will be the delivery system for content -- someday for music when the copyright issues are worked out -- and just about everything else from short videos to movies.

If I'm reading it right this a wonderful opportunity for record labels to satisfy the desire of the next generation to access more variety. Now, can they work out the remaining DRM issues and be the solution for this generation's boredom with their iPods?

Radio companies have an opportunity to create content for mobile devices. I know it's a bitter pill to swallow after spending billions of dollars to own terrestrial radio stations but the Internet is the new transmitter and the cell phone is the new receiver.

This generation is definitely not bored with their cell phones. They are attached to them permanently. I kid my USC students that someday when a new baby is born there will be an obstetrician and pediatrician, the parents, a psychologist and a lawyer to no doubt handle their RIAA lawsuits when they get older. I also say that I can see the day when a chip will be implanted in every new baby's head so they can receive signals, hear music and be on the GPS of life.

I'm kidding. I think.

They're not sure either.

One thing is for sure -- something is going on worth further study. The iPod is getting long in the tooth. It's still better than a radio to most but it's clearly not going to be enough to command the restless Gen Y.

It's too early to jump to conclusions, but times they are a changin' in the mobile space.

For the beleaguered radio and record industries -- it means opportunity if they will listen with an open mind.

If not, Steve Jobs will continue to satisfy their need for new content.

Which way do you want it?

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Overthrow Citadel Radio

Somebody lock Citadel CEO Farid Suleman in his office.

Don't hurt him but don't let him out.

It's time for the good and great employees of Citadel to take back their radio company and turn it around themselves.

Farid hasn't been able to.

In the past year alone Citadel stock took a nose dive from the $10 range to $2.05 when it closed last week. Get him to keep his hands off the company and watch his employees fix it.

Farid Suleman is best known for being Mel Karmazin's bean counter at Infinity. He's not the only radio CEO who should get a time out. All of them should. And the shareholders who can't sell their investments for a profit because they'll take a haircut should be leading the charge.

The final blow happened just before the market closed last week.

Farid announced he was seeking investment bank help to sell some more stations and raise additional, badly needed capital. T-R-I's Tom Taylor speculates that some of the Citadel properties could be worth between $75 and $175 million. That is if they can find buyers and financing. These stations have reportedly been for sale privately but now the bean counter thinks making it public will help sell them.

Ever cautious, Farid puts on his best silly face and lowers expectations to beyond rational levels when he says it may take 12 to 24 months. Come again? There are so many stations on the market right now that Citadel will have to wait its turn and oh, by the way, you won't be selling them for a premium. You'll be lucky to sell them at all.

So, let's say this angry group of non-violent change agents puts Farid-the-Bean-Counter under house arrest. Give him some pictures of his old boss to study and definitely cut the phone lines and high speed Internet.

Let's say the rebel leader -- who we will call Sid Adell -- takes charge right away.

"Get me Credit Suisse and Deutsche Bank on the phone", he tells his secretary. Then he tells both of them, "Never mind, we're not selling. We're keeping all our stations. I know, I know the Street won't like it, but that's only until it sees things getting better".

This guy Sid Adell is a genius for keeping the assets. After all, selling off radio stations when times get tough is like setting lifeboats adrift as the Titanic sails through Iceberg clogged waters. There is no benefit and you might need them anyway.

Sid Adell then gets on the phone with WABC Program Director Phil Boyce and says, "Phil, get those infomercials off W-A-B-"Freakin"-C". It's one of the biggest stations in the world and we'll find another way to make money -- like, putting on good programming. Where's our pride?"

Seriously, WABC has been carrying infomercials lately such as the ones for colonics -- allegedly describing in detail the bowel habits of people who get clogged up and ostensibly need their cleansing products. What shitty programming -- and yes, I chose that word on purpose.

Checking back with Suleman, safely under house arrest, we see he's taking his meals and reading a book on Warren Buffett. Aah, now we're getting somewhere. How is it that Warren Buffett buys mega billion dollar companies and let's the people who know their business run them. Just asking?

Keep reading.

Farid and all the other top radio group heads should be held responsible for the mess they've gotten their companies, shareholders and industry into.

Farid wants to sell more stations now because apparently the costly and ego-gratifying purchase of ABC wasn't as accretive to the shareholders as he promised. So, in the tradition of Wall Street, they can always blame everyone else and do the same thing all over again.

Look at all radio stocks. They are worth next to nothing.

There's no other way to put it -- the guys at the top have failed.

Sid Adell knows this and so he's going to go to each station and hold a town meeting, but instead of telling everyone as Suleman does that it's my way or the highway, Sid is going to ask them to improve their programming. Well, let's listen in...

"You are responsible for the programming. Come to me with a budget. If it's reasonable I will approve it. Give me a time line. Give me expected results. I will hold you to both, but I will not interfere. You are professionals. You know how to do this. And make sure you have an Internet strategy and a plan for mobile content. Make sure you know what social networking is beyond clicking on Facebook and MySpace. From now on you will be free to move about your stations and I will judge you on whether you succeed or fail. Fair enough?"

Now, let's be frank.

This group of freedom fighters can't do any worse than Farid's $2.05 a share.

In fact, once word gets out that Citadel is going to run the company instead of run from the industry, the stock will temporarily drop to $1.05 (which it might have done anyway) and then will rebound once the new leaders show Wall Street that they know what they are doing. Selling stations is for bean counters. Running them is for talent.

The entire radio industry is entering 2008 -- the year of the station fire sale.

But it's time to hold radio CEOs more accountable.

These folks had been granted unprecedented freedom to consolidate under the Telecommunications Act of 1996.

Freedom to use their considerable platforms to embrace new, interactive media.

Freedom to hire and promote the best and the brightest.

Instead, they created anarchy.

So maybe you can see why in my mind -- admittedly concussed from my years of battling with another major consolidator -- I actually think the inmates could run the asylum better.

And, get the share price back up to improved and realistic levels.

There's no other way to say it. This crop of radio CEOs failed and yet they still insist upon staying in power.

Stop selling properties, firing people, cutting the budget to the bone, running embarrassing infomercials and bastardizing an industry that already has what it needs for a turnaround -- without their longtime leaders.

It's time for a coup.

(Even though I'm having fun with some of my friends in the radio industry here I am quite serious about this -- the same old tactics are not working. Time for a change).

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Future Radio

There is increasing evidence that using your cell phone can cause brain tumors.

In a British study some scientists say there is a chance that talking on a mobile phone for as little as 10 minutes could trigger changes in the brain that are associated with cancer.

And a new Israeli study says regular use of mobile telephones increases the risk of developing tumors with certain gland growths nearly 50 percent higher for mobile phone user more than 22 hours a month.

Of course, rumors about cell phones and cancer risk have been circulating for many years but apparently the soothing voice of the cell phone industry has reassured us.

Perhaps not.

Perhaps cell phone usage is addictive and will someday require a warning similar to the Surgeon General's disclaimer on cigarette packages.

Our society is addicted to cell phones -- and smart phones such as the Blackberry or iPhone.

I reported what happened recently when I assigned my USC students a project to go cold turkey for two days -- they suffered high anxiety and couldn't wait to connect again to their phones and resume text messaging.

Simple cell phones are to today what portable radios were in the 60's. And what smart phone devices will be to tomorrow.

The iPhone has taken consumers' breath away. And as it evolves -- and other companies compete -- we are going to see the mobile device become the main delivery system for entertainment in the future.

It may not matter how dangerous it is to a consumer's health or for that matter to other consumers' well-being. For example: have you noticed how many young people are text messaging in their cars -- while driving?

A recent informal poll in one of my USC classes showed 100% of the hands raised when I asked how many of them texted while they drove. They laughed but reassured that they can multitask. No problem.

It is a problem.

In Phoenix it's a hefty fine if an officer pulls you over on suspicion of text messaging. I guess cops have nothing else to do out here in the dessert. My car was totaled two years ago when a young driver ran a light that had been red for 30 seconds! She readily admitted she was distracted on her cell phone.

Then CBS President (and now Sirius CEO) Mel Karmazin spoke at one of my Inside Radio management conferences. Mel said as he often did that radios helped people drive better (radio usage is not frequently mentioned as a cause of motorist distraction). Mel's a sly fox, indeed -- and the consummate salesman. He was saying it's safer to turn on the radio than talk on the cell phone.

Imagine the strength of a mobile medium that consumers would fight to keep in their hands -- even risking cancer or accidents.

That's how powerful the mobile phone is becoming -- more addictive than the transistor radio or Walkman of the past. And while linking cell phone usage to cancer is an overreaction at this point, it makes you think. I wouldn't give mine up. I don't know too many people who would give theirs up, either.

The mobile future is becoming pervasive.

You talk.

You text.

You take and send pictures.

You might email.

You might listen to music or watch a video.

You don't listen to radio.

There's a reason radios are not standard equipment on iPods and iPhones. Continuous radio is not something that young people listen to -- they want to pick and choose their programs and they want to have a say in them. Their shorter attention spans make traditional radio listening a thing of the past.

Some radio people distracted by how to save their terrestrial franchises fail to see that putting streaming music on the mobile phone is not the future of radio broadcasting.

But the real radio of the future is likely to be a podcast delivered on a docked phone or better yet on the fly with short form programs -- not constant music streams. For music programming this is not possible right now with so many copyright issues unresolved, but coming soon it will be. Short attention span radio.

The cell phone is simply a mobile delivery device.

It is not the medium.

The medium is no longer the message.

Great news for content providers including the talented and experienced people from the radio industry.

Today content is the message. The medium is just a delivery system.

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NAB -- Consolidating With the Stars

I know the major TV networks are relying on reality shows to make it through the writer's strike, but in radio there is an unreality show going on and a new episode developed Monday.

The radio industry's lobby group -- the National Association of Broadcasters (NAB) is asking the FCC to "consider continued relaxation" of the ownership rules having breathed a sigh of relief when the Commission rejected a rollback to pre-1996 levels.

You remember the NAB.

It's the trade group that collects your membership fees, charges you to attend industry conventions and works in the interests of a handful of big companies that want more consolidation.

The NAB is saying all the right things -- if you are a consolidator unable to get your stock price up even with the advantage of a virtual monopoly.

Things like citing the FCC's own research:

The FCC's own studies show evidence for continued relaxation of ownership rules.

Surprise! Surprise!

That FCC studies show consolidation has no statistical effect on advertising rates -- and that it is more likely to lead to even lower prices.

Isn't consolidation great!

That "It is hardly surprising several empirical studies have concluded that radio groups do not exercise undue market power in today's media marketplace given the ever increasing levels of competition radio stations face for listeners and vital advertising dollars".

I guess that's a slam dunk!

The radio industry gave the NAB one free pass when it was instrumental in getting relaxed ownership rules into the 1996 Telecommunications Act at the very last minute. Stealth lobbying.

The NAB isn't all bad. In fact its chock full of good people. But on this issue -- a strategic one, the NAB is dancing with the stars -- the big consolidators "who brung them there" -- who pay the bills. If all of a sudden Clear Channel told their stations not to become NAB members, the NAB would be history. The small owner is still important to them but the real money comes from the comparably small group of owners who own lots of stations and parenthetically, can't seem to operate them. That is -- without another relaxation of ownership rules.

Think about it.

There are so many radio stations on the market right now that Inside Radio reports brokers are turning down listings left and right. A broker turning down a listing is like a crack addict turning down -- well, you get the point. They're doing this only because most of these stations can't be sold right now given the market, the financial situation and the high price expectation of the sellers.

If the Bain and Lee privatization of Clear Channel doesn't happen, the entire industry will feel such a giant vote of no confidence. The financial package has a high penalty fee and the closing was just postponed again. What's more ominous is Clear Channel's per share trading price is going the opposite way of the sale price upon which the deal was based. Would you pay $20 billion for a company that is worth less every day? We'll see, won't we?

Consolidators -- all of them -- have proven they can't run their expanded platforms and they've got 12 years of experience trying.

Here's where we should listen to the advice of radio's largest consolidator -- Clear Channel.

Less is more.

Own fewer stations until you can run a few of them -- and I'm not just talking about Clear Channel here although they are the biggest owner. All the consolidators get a "F" for building shareholder value. Just look at yesterday's closing prices.

Your NAB has been pushing consolidation while pandering to the rest of you. There is no way further consolidation can help. It will just devastate the remaining companies that are barely hanging in there. I say this because owning a lot of radio stations is not the solution.

Running a few of them well -- profitably, in the public interest, with compelling content and marketed in the 21st century with electronic ratings and savvy sales techniques -- is the answer.

And few will fall for the cry baby response we're certainly going to hear that iPods, Internet, downloading, mobile phones, toasters and toothbrushes (I made up the last two!) are new competition that can only be met with running even more stations (inadequately).

More. More. More. Not the answer. Not today. Not any day.

More ventures into mobile content, Internet streaming, rebuilding terrestrial stations (not cutting back), getting into the digital music business, social networking, virtual worlds such as Second Life -- now you're talking. And in the year ahead you're going to hear me talking about these exciting areas that will be available to talented radio people once they accept that more stations is not the solution.

Don't look now but the bottom is falling out of the radio industry.

Ratings -- off (while consolidators amazingly and foolishly beat up electronic measurement at every occasion).

Sales down -- 2008 will be the worst year yet (even without the "mild" recession that's being predicted).

Denial -- read the Radio-info boards and see the arguments pro and con. I hate to tell them but radio is not coming back as a single platform growth industry.

FCC Chairman Martin can't even get further relaxation of ownership rules passed right now -- constituents of Congress apparently long for better radio (hint, hint).

But that's not stopping your NAB.

Even as Clear Channel and other major groups are handing out pink slips instead of holiday hams the real enemy is in the mirror.

What kind of industry supports a lobby group that supports the proven destructive wishes of a few of its biggest members?

NAB, the people who waste millions fighting their great Satan -- satellite radio.

NAB, the people who push the expansion agenda of failed consolidators.

NAB, the group that ought to be as vocal and forceful on fighting for Internet streaming royalties on a parity with satellite radio.

NAB, the group that is working against the future by lobbying for more of the past.

Maybe it's time to give them a pink slip.

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The RIAA Unplugged

The RIAA has filed a brief in an Arizona U.S. District Court against two average citizens (Jeffrey and Pamela Howell) who committed the dastardly crime of ripping their CD collection to MP3s so they could enjoy them around the house and perhaps on their iPods. The RIAA is also alleging that the Howell's put their ripped music on file sharing networks -- perhaps a trusted trump card for them in their case.

RIAA is alleging violation of copyright laws and the fair use doctrine.

If you think it's a simple case of RIAA speaking out of both sides of its mouth -- you would be correct.

During the MGM v. Grokster lawsuit in 2005 the RIAA specifically allowed that making digital copies of music for personal use was okay -- protected under the convoluted way they look at the fair use laws.

How sad is the music media business today:

1. The record labels embarrass themselves by acting like ambulance chasers over issues that will never stop illegal downloading of music. They know this, but they are doing it anyway because they don't have the skills needed to compete in today's music media business. No digital strategy. No new music. No hope of selling more CDs to a digital generation. No understanding of the importance of social networks in spreading the word about music. No ability to do live music performance which is why Live Nation stole Madonna away from Warner. Live Nation has those core skills.

2. The labels are behind legislation to punish colleges and universities if they are not more aggressive about stopping illegal downloading. Their burn-in-hell strategy also includes the potential of depriving universities of federal aid if they are found to be in violation. You know what a university is, don't you -- a hot bed of music consumers. Nonetheless, let's hope Congress can stand up to this scorched earth policy. No one can prevent the next generation from stealing music least of all universities. And it doesn't look like RIAA's lawyers are doing such a hot job either as -- in spite of all their law suits against consumers -- illegal downloading keeps growing exponentially.

3. The labels are hell bent to get their former partners -- radio stations -- to pay performance taxes at a time when the radio industry hangs in peril while the music industry can't produce products or services that will sell. If the labels succeed on this one, the labels might win the battle but they will most definitely lose the war. Imagine fewer radio stations playing the fewer hits these labels are turning out by -- say, next year. Disaster.

4. Big four and RIAA lawyers are backed up against the wall in their royalty fight with Internet streamers. But they have a face-saving solution in front of them -- as pointed out by my friend Kurt Hanson. Extend the same deal they are offering to satellite radio to Internet streamers. Namely, 13% max with 6% and 8% discounts for the next few years to help the fledgling satellite radio business. Why not make a similar offer to the Internet business that is even less profitable than the unprofitable satellite radio industry.

When the RIAA was surrounded by other "musical instruments" so to speak like studies that show how much revenue they are losing to illegal file sharing, their argument made music to the courts.

But unplugged -- all alone strumming on their own, well -- weak argument about legally purchased CDs -- RIAA is revealed for what they really are.

A group representing companies that have no clue what happened to them and even less of a clue as to what to do.

I noted that the Howell suit was filed in Arizona. One of my homes is in Scottsdale. They know where to find me. I'm in the house using the CDs I purchased as I see fit.

Want to make a federal case out of it?

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Faith-Based Consolidation

The eyes almost popped out of my head when I was reading Inside Radio the other day.

Clear Channel Executive Vice President Andy Levin is quoted as saying, "changes to the radio ownership rule are once again necessary".

Oh, it gets worse than this.

America's biggest radio consolidator and arguably the company that had the most to do with pushing a once thriving business into the doldrums wants Congress to save it from itself. After all, radio consolidators were given a virtual monopoly with passage of the Telecommunications Act of 1996 and they still couldn't make it pay off.

Shareholders are looking at embarrassingly low prices for the stocks many of them purchased at a much higher cost basis.

Listeners haven't been well served.

Consolidation hasn't fostered innovation, just cutbacks and false efficiencies.

The next generation has been allowed to walk away into the world of Internet and mobile devices without a well-financed and sustained attempt to keep them. That's how obsessed with cutbacks consolidators have been.

Loyal and talented managers, programmers and sales executives at first were asked to take on additional duties. Then radio's best assets were fired. Foolish programing efficiencies were implemented such as voice tracking and widespread use of national syndicated shows to save local salaries. Ask a manager what he or she does all day -- think of ways to cutback to the bone in the interest of quarterly earnings improvement and lately -- more firings just before the holidays.

Now get this. Clear Channel wants Congress to allow further monopoly by allowing companies such as Clear Channel and others to own as many as 12 stations in markets with more than 75 signals and ten in markets with 60 to 74 signals.

It would be laughable except -- with Congress these days anything is possible.

Poor consolidators.

I guess it didn't work out and it's everybody's fault but theirs.

Levin said radio is "still shackled" and by limiting the industry's growth, it also limits its local reach. Levin says before consolidation six in ten stations were operating in the red and now, after relaxed ownership rules, companies are still facing challenges with little or no growth over the past five years. Levin says, "This is unsustainable for our industry".

You could really cry for these screw ups, couldn't you?

Maybe you're not qualified to run a public company?

Maybe you've made a lot of mistakes (the rest of us have to admit ours, where's yours -- even one?).

Maybe Internet start-up companies are smarter and more able to compete than consolidated radio companies.

Their argument seems to be that unprecedented consolidation hasn't been enough to save radio so give us more.

No mention of the incompetence that has surrounded almost every decision from day one.

Now if I testified before Congress, I would say:

"Honorable members of Congress. I am here to ask for mercy for the unfortunate consolidators of a once vibrant radio industry. It seems that they bit off more than they could chew when you were kind enough to grant them what was tantamount to a virtual monopoly in radio markets nationwide. One of the reasons you may be reluctant to relax the rules further is because, like Congress, radio is a local medium and every attempt to make it more national meets with protest from our constituents. Listeners are missing the great things they used to get when radio was operated by companies that were more concerned with Main Street than Wall Street. In retrospect it was a mistake to grant a handful of operators the right to monopolize the public trust. Further attempts to get you to bail them out by allowing them to own even more stations will also fail. And the argument that radio is now competing with other media -- satellite radio, iPods, the Internet, cell phones -- is a weak and misleading argument. Radio always competed with other media except now that the local fiduciaries have been replaced by media barons they have failed a test in which they had all the advantages. And newspapers and television were replaced by iPods and the Internet. I urge you to not only resist the temptation to relax ownership rules further but to break up the large monopolies by allowing no group the ability to own more than 100 stations in total with a three in a market maximum".

FCC Chairman Kevin Martin -- a future lobbyist if there ever was one -- is reading the public contempt for consolidation accurately now and even he is discouraging any ownership changes.

But that's not enough.

This monopoly should be busted -- not only for the good of the people but for the poor consolidators who say their present shackles are unsustainable. Radio should be returned to the companies that want to run 100 terrestrial stations (and maybe Internet streams, mobile content companies, etc).

Now that would be a stock shareholders would invest in. Mixed media. No monopolies.

Let's tell the members of Congress that if you don't want to do this for us -- do it for them!

Put them out of their misery. Untie their shackles.

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The "Tickle Me Clear Channel" Doll

I can't take another day of hearing bad news from my friends in the radio industry who have been let go by Clear Channel in the latest massive clearance sale of top executives in advance of taking the company private.

Forget that it's happening at Christmas.

Clear Channel apparently has.

They say if you don't laugh, you'll cry. These fat cats are wreaking havoc on radio stations and on the lives of many talented and dedicated people who deserve better than a pink slip for Christmas.

So, I've come up with a parody called the "Tickle Me Clear Channel" doll inspired by the very popular Tickle Me Elmo.

When you go to Amazon's web page you get this description of the Elmo doll which makes it easy to juxtaposition Clear Channel reality right into it.

For example:

1. Elmo tickles America's funny bone with three interactive tickle spots on his chin, tummy and toe. But the "Tickle Me Clear Channel" doll tickles America's stock market with three tickle spots -- its low, low price, lack of a future in a dying industry and no plan to win the next generation.

2. Three different tickle spots trigger rounds of infectious laughter and movement. On our doll, the three tickle spots that trigger rounds of infectious laughter are John Hogan, John Hogan and John Hogan.

3. Elmo slaps his belly, falls forward with his butt sticking out (I'm not making this up), stands back up again, topples backwards, and kicks his legs over his belly. Our "Tickle Me Clear Channel" doll pounds his chest bragging about the shareholder value he is creating, falls forward with his butt sticking out to salute non-believers, stands up again to give another remarkably over optimistic quarterly report summary, topples backward again when he hears shareholders are driving the stock price down and kicks his legs over his belly once he finds two Wall Street banking firms to bail him out and take the whole mess private.

4. One of a kind unique toy. Our "Tickle Me Clear Channel" doll can say the same thing and raise you one.

5. Fun for all preschoolers. I'm not going there, but you can.

For all my friends out there who have had to sustain great career and personal hurt this holiday season from a company that hasn't been able to get its $90 share price above $35, I wish you well and know things will get better.

Dale Carnegie used to stay dislike the deed not the person -- and that's important to remember here because there are still many execs at Clear Channel who are fine people.

The radio industry has been dying a slow death for most of the 12 years since ownership limits were relaxed.

The future for management, programming, sales and on-air talent is in the Internet and mobile space. And the skills necessary to succeed are the ones you have -- not the ones the Clear Channel decision makers have proven again and again by their poor share price performance to be the ones they do not have.

Small consolation?

Maybe.

But very exciting and promising.

P.S. Here's another hilarious parody making the rounds about "Christmas at Clear Channel". Click here.

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Stealing Music Sells CDs

There is a new Canadian study on file sharing that bolsters what many of us who work with the next generation already know -- file sharing (or stealing music) actually helps the record labels sell CDs.

You can't tell that to the music industry.

They cannot and won't wrap their arms around this concept. If they allowed themselves to believe that stealing music actually sells CDs, they would have no one to blame for the sorry state of the record industry -- other than themselves.

Industry Canada did the study during 2006-07 to measure the extent to which peer-to-peer file sharing networks affected music purchasing in Canada. Data for this analysis is from a Decima Research survey and the report was prepared by University of London researchers.

The researchers found that music downloads have a positive effect on music buying among Canadians who download but that there is no effect when the entire population 15 and older is taken into consideration.

The findings are fascinating and thought-provoking. Here's a preview in the words of the researchers:

1. In the aggregate, we are unable to discover any direct relationship between P2P file sharing and CD purchases in Canada. The analysis of the entire Canadian population does not uncover either a positive or negative relationship between the number of files downloaded from P2P networks and CDs purchased.

2. However, our analysis of the Canadian P2P file sharing sub population suggests that there is a strong positive relationship between P2P file sharing and CD purchasing. That is, among Canadians actually engaged in it, P2P file sharing increases CD purchasing. We estimate that the effect of one additional P2P download per month is to increase music purchasing by 0.44 CDs per year.

3. Furthermore, our analysis of the Canadian P2P file sharing sub population does not uncover any relationship between P2P file sharing and the purchasing of electronically-delivered music files. [.....] It is difficult to conclude what is the net effect of P2P file sharing on purchases of electronically-delivered music.

4. Another important finding is that the overall results show that people who purchase paid electronically-delivered music are not less likely to purchase music in traditional markets (CD albums).

5. Furthermore, there is a strong evidence that people who buy a high number of DVDs, video games, cinema tickets and concert tickets also purchase a higher number of CD albums. The same is the case if we view the P2P file sharers in isolation.

You can read the analysis and view the charts by clicking here.

A Harvard study that has been well-worn over the past five years or so concluded that file sharers use the music to discover what they may want to buy. In fact, it points out that much of the music that is sampled is then deleted. No harm done.

The Canadian study is perfectly in line with what I have witnessed in working with the next generation at the university level.

Young people no longer rely on radio to help them discover new music -- they look to each other through file sharing and social networking. They have to hear it somewhere to even consider buying it. And when they decide not to buy it, they may keep listening to it or they may disregard it or delete it.

Young consumers also look at things holistically. For example, they feel they support many of their favorite artists by attending concerts and live shows. And they feel they are gouged by the promoters and ticket agencies. This does not leave them in a mood to want to buy CDs unless they actually want to own the CD.

Gen Y has proven that they will buy music they want to own once they know they like it. An example of this is iTunes which charges 99 cents for the convenience of selling a track of music that young consumers could otherwise steal.

And young consumers seem to want to own the music they pay for rather than subscribe to services that offer millions of songs for a monthly fee. The subscription model has not been as effective as the 99 cent iTunes model offered by Apple.

Universal's new plan to offer "free" music for 12 months on Nokia phones will be flop if I am reading it right. By the second half of 2008 when the project begins maybe Universal will then find out.

Even if consumers could get music from all four labels for free for 12 months, it won't work. Universal thinks it will pressure its arch rival Apple. There's bad blood between the two industry giants -- so much so that Universal can't focus on the real problem.

Themselves.

Subscription services will fail.

Nokia is not Apple.

Stealing music sells CDs (we've got new proof as you have read today).

And, the future of the music industry is closer to Live Nation than any of today's big four labels.

When Live Nation signed Madonna for a ten year mega buck deal, skeptics said it would never make its investment back. I believe a few world tours and they make their original stake back because artists don't need labels anymore. They need touring experts, merchandisers and access to the top venues.

These things are not among the skill sets of record labels.

That's why the labels are forced to rely on what skills they traditionally have had -- suing people, cutting costs and manufacturing.

Unfortunately the labels are in a dying business but they helped to kill it. The latest Canadian study on file sharing will not be the last indictment of their incompetence.

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Arbitron’s "Sinister" People Meter Threat

The radio industry is turning into one giant joke. But it isn't so funny.

Clear Channel firing everyone in sight before Christmas.

The meaningless war against satellite radio.

HD -- or High Destructive Radio.

And now the latest comedic effort on the part of broadcasters who should know better.

The National Association of Black Owned Broadcasters (NABOB) is asking the House Commerce Committee to launch an inquiry into Arbitron’s People Meter as a – and this is a quote so try not to laugh out loud – “sinister threat” to minority broadcasters because urban and Hispanic stations could lose listeners due to lower PPM ratings. Some lawyer also put in a request for the Commerce Committee to investigate the federally regulated Media Ratings Council.

Great.

Nothing like screaming FIRE! in a crowded theater.

These folks aren’t the only shortsighted industry executives. After all, the major radio groups – the big guys who pay Arbitron the majority of their money – have been trashing PPM for quite a while now.

Sooner of later the message will get through to media buyers and advertisers: beware of radio. Even radio doesn't trust its own ratings.

Only CBS President Dan Mason has shown leadership on People Meter. When addressing an investment banking conference the other day, Mason came up positively and squarely behind the concept of electronic ratings. He admitted Arbitron had some work to do but he left everyone with the impression that electronic ratings is a good thing for radio and a great thing for advertisers.

CBS knows radio. Mason and his team are putting on a clinic. He’s restoring brands that were devastated by his predecessor Joel Hollander and, equally important, he is talking up radio to advertisers in a meaningful way – not the quarter by quarter dribble consolidators are offering up.

I know. I know. CBS is a mega corporation and a consolidator. But it is acting like a responsible citizen of the media industry on this issue.

Don’t trash your own.

There is never a good time to speak ill about radio ratings when advertisers are listening and how could they not hear the radio industry undermining the very ratings system buyers will have to use to advertise on radio.

Back to NABOB.

They’re not playing the race card. They are playing the disgrace card.

If they win with Congress. They lose. What kind of sense does that make?

About the same as everything else radio people seem to be doing these days as they are fast becoming the Dr. Kavorkians of their industry. These folks are the first to criticize those who disagree with their stewardship and at the same time they are fighting battles that they can’t win.

And they won’t win.

They’ll just disgrace themselves and their industry.

The next year is going to be awful according to analysts, industry leaders and informed observers.

So this is one last call for sanity.

How about a new approach? Pick up the phone and call Mason. I know some of you are thinking CBS stands to benefit from the People Meter in New York – say, with WCBS-FM. True enough but look at the diary extrapolations and CBS-FM is still doing pretty fine no matter which ratings system you consult. All of radio stands to benefit.

Follow the leader on PPM.

Get out of your own way.

The bottom line is radio companies created this monster – PPM. They are the ones funding it. Falling all over themselves to sign long-term Arbitron contracts. You don’t buy a new car and then proceed to crash it to make a point.

The more effective strategy is to threaten Arbitron with financial pain. That’s something public companies understand all too well and it can be done in private. Consolidators do it all the time.

Stop signing your long-term Arbitron contracts if you don’t like how they are addressing your problems. That’s how to play hardball.

Cox’s Bob Neil has hardly ever had a nice thing to say about People Meter. His consultant Randy Kabrich is extremely vocal on this issue and Kabrich whispers in Neil’s ear (if whisper is the right word here).

So what does Cox do?

It signs a long-term Arbitron contract to support the People Meter.

That’s putting your money where your – well, choose any body part – is.

Cox is not alone. All the big companies have purchased the car -- so to speak -- and now want to crash it.

Let's get it straight. Arbitron deserves a big kick in the pants. It must be held more accountable. There is a long list of issues it must address in addition to the obvious. Arbitron comes up with a guarantee because radio clients want what they paid for, but more is at stake here.

Take the Arbitron execs in the back room and rough them up a little but – no not physically – better than that.

Tell Arbitron they will not get your business again if they don’t meet your reasonable demands in a reasonable period of time. Then stop the embarrassing bad publicity that will only hurt the radio business later.

Twist Arbitron's arm. You have all the leverage -- your business. Watch how fast Arbitron jumps on it. Empty threats and disparaging words only hurt the radio industry in the eyes of advertisers.

Mark my words.

NABOB’s investigation will get nowhere in the end.

Radio will continue to be devalued in the minds of advertisers by airing its own dirty laundry so publicly.

The People Meter rollout will resume within the year.

And the best one yet…

These loudmouth radio groups will sign their Arbitron renewals for PPM when the time comes.

It makes no sense.

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